According to the New York Times, the economic lifeline involves two programs. The first will see the Fed buy up to $600 billion worth of debts linked to mortgages underwritten by the lenders Fannie Mae and Freddie Mac.
Elsewhere, the central bank will contribute as much as $180 billion to a new lending facility intended to provide finance for companies against asset-backed securities (ABS).
The Treasury will add a further $20 billion worth of credit protection to the program, which is designed to increase liquidity and get the market for credit such as car loans, student loans and small business loans moving again.
Initially, the program will only accept securities given the top Triple-A rating by two ratings agencies but Treasury secretary Henry Paulson said the scheme could be "expanded and increased over time" to cover other forms of debt, such as mortgage-backed securities.
In other news, New York Federal Reserve chairman Timothy Geithner has been confirmed as president-elect Barack Obama's pick to succeed Mr Paulson at the Treasury.